Toys "R" Us narrows second-quarter loss

TRENTON, New Jersey (AP) - Giant toy retailer Toys "R'' Us Inc. said Monday it cut its second-quarter loss by a third as higher sales for its Internet, international and baby products divisions helped offset rising overhead expenses and slumping sales at its U.S. toy and children's apparel stores.  

Its stock jumped 7 percent on the news. 

Toys "R'' Us, the nation's No. 2 toy retailer, said its net loss for the quarter ending Aug. 2 was $11 million, or 5 cents per share. 

That matched the consensus forecast of analysts surveyed by Thomson First Call. 

In the year-ago quarter, Toys "R'' Us posted a net loss of $17 million, or 8 cents per share. 

The company said excluding an accounting change involving vendor credits and allowances for cooperative advertising, its second-quarter net loss would have been $5 million, or 2 cents per share. 

"I'm cautiously optimistic that they'll have a better second half than they did last year, given the changes that are being made to stores and the improvement in the economy,'' said Margaret Whitfield, toy and retail analyst at Brean Murray & Co. 

Total sales for the quarter hit $2.14 billion, up 3.3 percent from $2.07 billion a year earlier, despite the weak economy and tough competition. 

Excluding the effect of favorable currency exchange rates, revenues rose 0.6 percent. 

Comparable toy store sales rose 4 percent for both the Babies "R'' Us and international divisions, but fell 9 percent at the company's Kids "R'' Us stores, 37 of which were closed under a restructuring announced in January 2002, said John Eyler, chairman and chief executive officer. recorded a 21 percent sales increase, to $51 million, but the company's largest division, which operates 679 U.S. toy stores, saw comparable store sales decline 2.4 percent to $1.4 billion. 

Whitfield said the weak spot in U.S. toy stores was the 18 percent decline in revenues from video products, partly due to price markdowns for gaming systems. 

"We are not satisfied with the performance of our U.S. toy stores during the first half,'' said Rick Markee, who became president of U.S. toy stores in May. 

For the first six months, the company posted a net loss of $18 million, or 8 cents per share; those results were reduced by 4 cents per share due to a first-quarter charge for severance costs related to about 200 corporate jobs eliminated earlier this year. 

A year ago, Toys "R'' Us reported a loss of $3 million, or 2 cents per share. 

Sales for the first six months totaled $4.31 billion, up from $4.17 billion in the first six months of 2002. 

Toys "R'' Us again said it expects earnings per share for the year to total $1.15, or 10 cents more than the analysts' consensus forecast. 

On the New York Stock Exchange, Toys "R'' Us shares were up 83 cents to close at $12.71. - AP 


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